This is the blog of David M. Raab, marketing technology consultant and analyst. Mr. Raab is Principal at Raab Associates Inc. The blog is named for the Customer Experience Matrix, a tool to visualize marketing and operational interactions between a company and its customers.

Thursday, July 30, 2009

Summary: Hubspot offers a bundle of Web traffic generation and lead management features in one low-cost package. Small businesses willing to invest some effort should be pleased with the results.

Yesterday’s post described one strategy to sell marketing automation to small businesses: provide a specific, turnkey service that requires virtually no skill or effort from the user. But I don’t think that can scale: companies require many different services and will not want to buy and run each one separately. So I believe the future lies with integrated marketing automation systems that combine many different functions while sharing data and processes whenever possible.

Of course, these multi-function systems must still be suited to users with little time and expertise. Marketing automation vendors entering this market are essentially betting that they can make their systems powerful enough to be useful and easy enough for a small business to run. If the vendors fail, the business will go to consultants, ad agencies, and other service firms that do the clients’ marketing for them. That would greatly limit the marketing automation vendors' business.

Hubspot has accepted this challenge. Although Hubspot positions itself as an “inbound marketing system,” it actually does more than the search engine optimization, blogging, social media interactions and related analytics needed to generate Web traffic. The current version also hosts landing pages and Web sites, manages a lead database with profiles and Web activity history, generates lead scores, sends alerts to sales people, and synchronizes data with Salesforce.com.

All that’s missing to be full-blown demand generation system is outbound email and lead nurturing campaigns—which the company has announced it will add.

Implementations of these features are intentionally simple, since ease of use is more important than sophisticated options for small business marketers. But Hubspot also applies automation to improve results without making the user work harder. For example, the blogging system automatically connects the blog to social media sites that help to redistribute content. It also checks posts to ensure they are optimized for search engine rankings. Hubspot provides similar graders for the Web site and individual pages, each generating reports and recommendations for improvement.

(Free versions of these and other graders are available from Hubspot at Grader.com. Most seemed fairly useful when I played with them a bit, although the Web “personality grader” managed to be both inaccurate [“your Internet use primarily consists of emailing family pictures and checking your teenager’s Facebook”] and insulting [“engaging in more meaningful conversations and sharing less about your personal life may improve this grade”]. I'm not sure what to make of that, except to suspect that someone left the programmers unsupervised. [I've since been informed that Personality Grader was an April Fool's joke.])

The scope of Hubspot makes it somewhat difficult to assess. The system’s heart is clearly search engine optimization and the supporting features to generate content (blogs and Web sites), receive the resulting traffic (landing pages) and analyze the results. These components seem well designed, tightly integrated and, at least for the graders, innovative.

The one major missing inbound marketing feature is paid search management, such as Google AdWords integration. Hubspot Marketing VP Mike Volpe said that paid search can be tracked as a source, and that clients have not requested deeper integration – apparently because they’re already happy with the AdWords interface. But I still find this a curious gap, since it leaves the system blind to a major marketing expense. It's part of a general lack in Hubspot of the “campaign” orientation found in most marketing automation systems. Maybe small businesses don't think in campaign terms -- or maybe it's just that search engine optimization isn't organized that way.

Hubspot looks more like a conventional marketing system in its ability to manage a lead database. Leads can be captured on landing pages, imported from lists or added through Salesforce.com synchronization. The system can also create profiles of anonymous visitors, using their IP address to infer geographic location and company. The database can include answers to survey questions and fields imported from Salesforce.com. It also stores Web activity history, captured by the usual methods: tracking scripts on the Web pages (created automatically on Hubspot-built sites) and cookies on the visitor’s PC.

Hubspot originally used its lead database largely for analytics. But it added Salesforce.com integration in 2008, which also meant the leads and their activity history could be shared with sales people. It extended this in 2009 email alerts triggered when user-selected leads visit the Web site. It also now uses Salesforce.com opportunity records to measure the close rates of leads from different sources. Users can also flag the closed leads manually.

Closed leads are also used to build a ranking system that assigns each lead a value between 1 and 100 based on its likelihood to close. This is a good example of the Hubspot philosophy at work: the grading system is simple (just one score), simplistic (formulas can look at the number of page visits, but not particular pages) and fully automated (it develops a custom scoring formula for each client and adjusts it over time without any manual input). Volpe acknowledged it takes a long time to gather enough data to build a reliable formula. But he argued (and I agree) that few small business marketers could build a better formula on their own.

Once Hubspot adds outbound email and nurturing campaigns – which Volpe said should be “relatively soon” -- its lead management features will about match other small business demand generation systems. That’s good enough, though not as impressive as its search optimization capabilities. (Actually, most small business demand generation products also offer a lightweight CRM module for companies that don’t have a separate CRM system. But I consider that optional.)

Hubspot also includes some functions that extend beyond traditional demand generation. These draw from its roots in Web traffic analysis. One is an automated analysis of competitive Web sites, based on Website Grader. This shows traffic from major keywords plus several types of rankings. Other features include automated Web scans to identify changes in keyword rankings and relevant social media articles. The social media features also make it easy to comment on the articles and to measure the reach of the company’s own blogs, Twitter, Facebook and YouTube posts. Although none of these is itself a major innovation, they’re useful tools to assemble in one place.

So now that we’ve taken a look at some of the mechanics of Hubspot, let’s circle back to the original question: is Hubspot powerful enough and easy enough for small businesses marketers?

The system clearly succeeds on the power front: although most of its features are fairly basic, they should be more than adequate for most companies. Even though Hubspot is not quite a complete marketing solution (lacking the paid search management and integrated CRM), it does enough different things to replace many other systems.

I have more doubts about user effort. Hubspot isn't hard to use, but it does seem to require a lot of work from its users. In particular, the Web site and keyword reports all seem to issue alerts and recommendations that the user has to execute separately. Whether it’s adding new keywords to page metadata, changing a bid on a paid search ad, or rewriting copy to be more search engine friendly, Hubspot looks more like a demanding boss than a helpful assistant.

In a small business where people are already stretched to the limit, a system that adds rather than reducing work is not very appealing. Even knowing that the added work is valuable doesn't necessarily solve the problem: the time has to come from some other work that has value of its own.

But maybe that’s just me. Volpe said that users’ biggest problem is finding time to write new content, not making the other changes like tweaking page tags. This is because most of the system’s automated recommendations are specific enough that they’re pretty easy to execute.

Of course, the customers are the ultimate judges of success. Volpe said that 98% of Hubspot users renew each month. That sounds pretty impressive, although it does equate to losing nearly 25% over one year. A less ambiguous statistic is the current customer count of 1,400, which is higher than any other small business demand generation system I’ve seen (though still dwarfed by Infusionsoft’s 15,000 clients).

Even small businesses shouldn't have a problem with Hubspot pricing: a version without Salesforce.com integration costs $250 per month, while one with Salesforce.com integration costs $500 per month. There’s a $500 setup fee for both products, which covers four hours of consulting. There are no additional costs related to volume or anything else, although that might change when email campaigns are added. The smaller system is sold on a month-to-month basis, while the larger version requires an annual contract. The company also offers a seven day free trial.

You say, "Hubspot isn't hard to use, but it does seem to require a lot of work from its users."

My view: HubSpot doesn't require a lot of work - committment to the inbound marketing methodology does. Inbound Marketing takes time and effort, just like exercise. But it's a good investment!

I've used HubSpot at two companies, and will soon start to use it at my 3rd. I've found it to be a powerful, low-overhead way to build a site, analyze what's going on, and build a marketing engine well-integrated with our sales process.

Previously, I had to string together a bunch of paid and free tools and technologies, and still couldn't get the ease of use or full features of HubSpot.

Ilya, I fully agree that inbound marketing takes work and that Hubspot reduces the work compared with stringing together a bunch of separate solutions. That leaves two questions:

- is inbound marketing worth that effort for a particular business (compared with other possible uses of your time, which is always limited); and,

- could Hubspot further reduce the work by automating some of execution tasks it now leaves up to the user. (For example: rather than just telling me my pages need metatags, could it propose some and add them for me if I agree?)

Obviously the two questions are related, since reducing the work (while still yielding the same results) would increase the return on time invested and thereby make using the system more attractive. In this context, it's worth repeating Mike Volpe's comment that most of the work is in actual content creation -- so even if Hubpot were more automated, total time to run an inbound marketing program wouldn't change much. This is a good argument for why more automation isn't that important.

Like Ilya - I have brought HubSpot into 2 companies. I did this primarily because of its improvement in usability and efficiency from the alternative method of using several programs and tools.

If there is a way to further improve upon these efficiency gains you can be sure that HubSpot will find and deliver them. I have not had the opportunity to work with a solution that is so consistently improved.

Is inbound marketing worth the effort? Well every business has to decide that for themselves. But I think most see that the effort to do outbound marketing is equal and often significantly more - and definitely more frustrating and costly.

As a small business owner I would agree with your statement, "multi-function systems must still be suited to users with little time and expertise".

What I'm most concerned about when making an investment in marketing, or any area of my business, is ROI. As you mention "small business... people are already stretched to the limit". That's why we need evaluate the best use of dollars/time and how best to get an ROI.

My experience with Internet marketing was many vendors with a proven track record charged more than I could afford, and the less expensive ones either didn't have a track record or only created web sites, and lead Generation/SEO was an after thought. I spent 5k with a web developer over a 6 month period and generated no leads, although the web site looked great.

I then searched the web and tried to "do it myself", which led to lots of time invested and again no results.

This left me in a tough spot. I could afford to spend some money on marketing, but not enough to interest a SEO vendor with a proven track record, and I could afford to spend time on marketing but not enough to become an expert and still continue to run my business.

I was looking for what you described, "Marketing automation... powerful enough to be useful and easy enough for a small business to run"

That led me to Hubspot, which has delivered great results the past 18 months. However the greatest ROI using Hubspot was not automating marketing, although that's what generates the results, it was actually a reduction in sales expense that has generated the greatest ROI. What I mean by that is prior to Hubspot I generated leads by making cold calls, sending e-mails, mailing brochures/flyers, and using creative techniques like VITO (very important top officer) letters. Techniques I had learned, and been successful using, during my 15 year sales career.

Over the years these techniques have had declining success rates, so I knew my approach to sales had to change. To me that's where the value of Hubpsot lies, in coupling sales and marketing to generate leads and close sales. While you may consider Hubspot "marketing automation", and its value to marketing, I believe you also need to consider the value it provides Sales. If you can make the conversion from outbound sales methods to inbound sales methods (writing blog articles, creating web pages, whitepapers etc.), and the inbound methods are successfully delivering lots of new qualified leads, which convert to paying customers, then the Hubspot platform will be provide a off the charts ROI, which will make the time consuming process of creating content less of an issue.

David thanks so much I have been researching Hubspot and it appears to be somewhat expensive (IMO) and other than your Blog I have found little that does not appear to be generated by hubspot regarding its use.

I've used Google Analytics and about 5 other tools for years. Just switched to this type of product and love it. Has saved me so much time. I use Rhino SEO though, which is pretty comparable (www.rhinoseo.com). Nice review!

They're pretty different. Hubspot is for somewhat larger companies and is more about 'inbound marketing'. Infusionsoft is for very small companies and does email, CRM, etc. It should be pretty clear whether you need one or the other.